In its report, Renewable Energy Outlook: Egypt, the International Renewable Energy Agency (IRENA) envisages a scenario in which solar becomes the second largest energy source in the country, after gas. If current plans and RE strategies are maintained, however, just 9 GW will be installed by 2030, compared 44 GW. The agency recommends a series of actions to achieve a 2030 renewable energy target of 52%. Emiliano Bellini explains how.
Egypt has the potential to reach 44 GW of installed solar PV power by 2030, according IRENA, which has outlined how the Northern African country could develop its renewable energy strategy, in a new report, “Renewable Energy Outlook: Egypt.
Here, the agency provides two different scenarios suggesting how the country’s energy system could evolve over the next two decades: (i) a Reference case, with a baseline scenario based on current plans and policies; and (ii) a REmap case, based on an assessment of the accelerated potential of renewable energy in Egypt. Under the latter, it urges the government to periodically re-evaluate longer-term energy goals, to reflect the changing market dynamics.
Under the first scenario, the country’s total installed capacity is expected to grow by around 250% to 117 GW, with the majority of growth coming from coal, natural gas, wind and solar PV. Of this capacity, just 9 GW will be represented by solar power generators, however, while coal and gas will have each a share of 20 GW. Wind will occupy the third position, with 18 GW.
If achieved, these targets would enable Egypt to cover around 25% of its power consumption with renewables, which would in turn, also be able to account for 11% of total primary energy consumption.
This growth is expected to be determined by a GDP increase of 119% by 2030, which would also result in energy demand rising by 117%, from 62 Million Tonnes of Oil Equivalent (Mtoe) in 2014, to 133 Mtoe by 2030.
Under the second, and more optimistic, scenario, renewables could cover around 52% of total power demand and 22% of total primary consumption by 2030, thus doubling both percentages under the first scenario. Furthermore, according to these forecasts, solar would become the country’s largest power sources after gas, with 44 GW of installed capacity.
Meanwhile, wind and CSP would become the third and fourth sources of power, with around 21 GW and 8 GW, respectively. Non-renewable electricity sources – mainly gas and coal power plants – would reach an installed power of 61 MW, while total installed power would equal 137 MW – 20 GW more than in the Reference case.
In order to make the second scenario possible, IRENA has recommended a series of actions to “reflect the growing cost advantages and other benefits of renewables.” Among the listed measures there are, among others: constant updates of Egypt’s energy strategy; improving regulatory frameworks; clarifying institutional roles and responsibilities for wind and solar development; bundling renewable energy projects to strengthen risk mitigation and ensure financial viability; conducting comprehensive measurement campaigns for solar and wind potential; and developing plans for local renewable energy manufacturing capabilities.
Egypt is currently deploying solar through the Benban PV complex under an expired FIT scheme, which is expected to see the grid-connection of all of its 1.8 GW capacity by the end of June 2019. In addition to this, the country is also supporting rooftop PV through net metering and more large-scale solar through two new tenders.
Emiliano Bellini is a journalist for pv magazine since March 2017. He has been reporting on solar and renewable energy since 2009. In its previous experience as a journalist, Emiliano has written about EdTech and new language technologies.
This article has been republished from pv Magazine.
By Timothy A. Wise
Cross-posted at Food Tank.
On December 17, the United Nations General Assembly took a quiet but historic vote, approving the Declaration on the Rights of Peasants and other People Working in Rural Areas, by a vote of 121-8 with 52 abstentions. The declaration, which was the product of some 17 years of diplomatic work led by the international peasant alliance La Via Campesina, formally extends human rights protections to farmers whose “seed sovereignty” is threatened by government and corporate practices.
“As peasants we need the protection and respect for our values and for our role in society in achieving food sovereignty,” said Via Campesina coordinator Elizabeth Mpofu after the vote. Most developing countries voted in favor of the resolution, while many developed country representatives abstained. The only “no” votes came from the United States, United Kingdom, Australia, New Zealand, Hungary, Israel, and Sweden.
“To have an internationally recognized instrument at the highest level of governance that was written by and for peasants from every continent is a tremendous achievement,” said Jessie MacInnis of Canada’s National Farmers Union. The challenge now, of course, is to mobilize small-scale farmers to claim those rights, which are threatened by efforts to impose rich-country crop breeding regulations onto less developed countries, where the vast majority of food is grown by peasant farmers using seeds they save and exchange.
Seed sovereignty in Zambia
The loss of seed diversity is a national problem in Zambia. “We found a lot of erosion of local seed varieties,” Juliet Nangamba, program director for the Community Technology Development Trust, told me in her Lusaka office. She is working with the regional Seed Knowledge Iniatiave (SKI) to identify farmer seed systems and prevent the disappearance of local varieties. “Even crops that were common just ten years ago are gone.” Most have been displaced by maize, which is heavily subsidized by the government. She’s from Southern Province, and she said their survey found very little presence of finger millet, a nutritious, drought-tolerant grain far better adapted to the region’s growing conditions.
Farmers are taking action. Mary Tembo welcomed us to her farm near Chongwe in rural Zambia. Trained several years ago by Kasisi Agricultural Training Center in organic agriculture, Tembo is part of the SKI network, which is growing out native crops so seed is available to local farmers. Tembo pulled some chairs into the shade of a mango tree to escape the near-100-degree Fahrenheit heat, an unseasonable reminder of Southern Africa’s changing climate. Rains were late, as they had been several of the last few years. Farmers had prepared their land for planting but were waiting for a rainy season they could believe in.
Tembo didn’t seem worried. She still had some of her land in government-sponsored hybrid maize and chemical fertilizer, especially when she was lucky enough to get a government subsidy. But most of her land was in diverse native crops, chemical free for ten years.
“I see improvements from organic,” she explained, as Kasisi’s Austin Chalala translated for me from the local Nyanja language. “It takes more work, but we are now used to it.” The work involves more careful management of a diverse range of crops planted in ways that conserve and rebuild the soil: crop rotations, intercropping, conservation farming with minimal plowing, and the regular incorporation of crop residues and composted manure to build soil fertility. She has six pigs, seven goats, and twenty-five chickens, which she says gives her enough manure for the farm.
She was most proud of her seeds. She disappeared into the darkness of her small home. I was surprised when she emerged with a large fertilizer bag. She untied the top of the bag and began to pull out her stores of homegrown organic seeds. She laughed when I explained my surprise. She laid them out before us, a dazzling array: finger millet, orange maize, Bambara nuts, cowpeas, sorghum, soybeans, mung beans, three kinds of groundnuts, popcorn, common beans. All had been saved from her previous harvest. The contribution of chemical fertilizer to these crops was, clearly, just the bag.
She explained that some would be sold for seed. There is a growing market for these common crops that have all-but-disappeared with the government’s obsessive promotion of maize. Some she would share with the 50 other farmer members of the local SKI network. And some she and her family would happily consume. Crop diversity is certainly good for the soil, she said, but it’s even better for the body.
Peasant rights crucial to climate adaptation
We visited three other Kasisi-trained farmers. All sang the praises of organic production and its diversity of native crops. All said their diets had improved dramatically, and they are much more food-secure than when they planted only maize. Diverse crops are the perfect hedge against a fickle climate. If the maize fails, as it has in recent years, other crops survive to feed farmers’ families, providing a broader range of nutrients. Many traditional crops are more drought-tolerant than maize.
Another farmer we visited had already planted, optimistically, before the rains arrived. She showed us her fields, dry and with few shoots emerging. With her toe she cleared some dirt from one furrow to reveal small green leaves, alive in the dry heat. “Millet,” she said proudly. With a range of crops, she said, “the farmer can never go wrong.”
I found the same determination in Malawi, where the new Farm-Saved Seed Network (FASSNet) is building awareness and working with government on a “Farmers’ Rights” bill to complement a controversial Seed Bill, which deals only with commercial seeds. A parallel process is advancing legislation on the right to food and nutrition. Both efforts should get a shot in the arm with the UN’s Peasants’ Rights declaration.
The declaration now gives such farmers a potentially powerful international tool to defend themselves from the onslaught of policies and initiatives, led by multinational seed companies, to replace native seeds with commercial varieties, the kind farmers have to buy every year.
Kasisi’s Chalala told me that narrative is fierce in Zambia, with government representatives telling farmers like Tembo that because her seeds are not certified by the government they should be referred to only as “grain.”
Eroding protection from GMOs
As if to illustrate the ongoing threats to farm-saved seed, that same week in Zambia controversy erupted over two actions by the government’s National Biosafety Board to weaken the country’s proud and clear stance against the use of genetically modified crops. The Board had quietly granted approval for a supermarket chain to import and sell three products with GMOs, a move promptly criticized by the Zambian National Farmers Union.
Then it was revealed that the Board was secretly drawing up regulations for the future planting of GM crops in the country, again in defiance of the government’s approved policies. The Zambian Alliance for Agroecology and Biodiversity quickly denounced the initiative.
The UN declaration makes such actions a violation of peasants’ rights. Now the task is to put that new tool in farmers’ hands. “As with other rights, the vision and potential of the Peasant Rights Declaration will only be realized if people organize to claim these rights and to implement them in national and local institutions,” argued University of Pittsburgh sociologists Jackie Smith and Caitlin Schroering in Common Dreams. “Human rights don’t ‘trickle down’—they rise up!”
While it was once mocked for being about as smart as “farming pineapples in Alaska,” German solar has taken a bite out of traditional energy. With 1.5 million installations nationwide, solar and storage are further impacting traditional generators, says Lee Michael Buchsbaum.
For the first time in five years, in 2018 Germany is on track to reach its annual expansion goal of 2.5 GW. With the goal in sight, German solar industry lobby group BSW Solar subsequently called on the government to reconsider its current unpopular 52 GW cap on support, which at current rates could be reached by 2020.
And expansion rates could be boosted even further once the removal of import tariffs translates into a further drop in panel prices. At the end of October, Germany’s cumulative installed PV capacity since the adoption of the nation’s renewable energy law (EEG) had reached 45.3 GW.
Indeed, according to new figures, Germany added 182 MW of new PV capacity in October, the vast majority of which was small and medium-sized PV rooftops. The new totals are slightly less than September’s total of almost 200 MW.
Reflective of both its growing popularity and decreasing generation costs, earlier this year Germany’s Federal Network Agency (Bundesnetzagentur) held a second joint tender for large-scale solar PV and on-shore wind. As in the first auction of the same kind held in April, only bids for solar projects were awarded a contract. Combined, the Bundesnetzagentur selected 36 PV projects with a combined capacity of 201 MW.
The auction’s final average price was €0.0527/kWh, which is significantly up from €0.0467/kWh registered in the April auction. Bids ranged from €0.0465/kWh to €0.0579/kWh. Overall, 10 projects totaling 65 MW were awarded in the German eastern region of Brandenburg.
German developer Enerparc, meanwhile, won eight projects. Reflective of increased solar energy conversion and falling generation costs, “the joint tender process looks like an additional invitation to tender for solar projects,” it added.
Despite the fact that Germany receives comparatively little sunshine, it has become a surprising global leader in solar power. Led by energy enthusiasts, early adopters drove not just the installation of panels, but the manufacture of them as well. Production really took off after 2008 and for a brief period Germany became the world’s largest manufacturer. Financial support under Germany’s Renewable Energy Act (EEG) allowed generation capacity to grow more than sixfold in only five years and firmly established the technology as a main pillar of the Energiewende.
Nevertheless in 2012, Jürgen Grossmann, then CEO of energy company RWE AG, Germany and Europe’s worst polluter, claimed that supporting solar power in Germany was as smart as “farming pineapples in Alaska.” Five years later, the nation ranked first globally in solar power capacity installed per capita.
Though the nation’s solar manufacturing sector has dramatically shrunk and state-mandated support rates have dropped, an upswing in new industrial installations, the rising availability of home power storage appliances, a growing awareness of the need for clean energy, and other factors has propelled increasing deployment.
Reflective of this, as of December 2018, Germany’s home-mounted battery plus PV firm, Sonnen GmbH, has received prequalification from transmission system operator, TenneT to participate in Germany’s primary control energy market. While it is currently allowed to deliver 1 MW, the next goal is to supply 100 MW as the energy balancing concept is worked out.
Nationwide, Sonnen has sold around 30,000 battery storage systems. While its customers typically consume 70 percent of the power they produce themselves, the batteries help them store power for later use, release it to the public grid, or share it with other Sonnen community members in an online Network.
Sonnen and its partners will combine its nationwide network of residential battery systems into a large virtual storage unit that will, among other services, help compensate for fluctuations in the power grid.
Jean-Baptiste Cornefert, head of Sonnen’s eServices retail unit, told Reuters that the company will now begin bidding in the nation’s primary balancing power auctions by pooling the power generation and storage of its thousands of small customers. “For the first time, a big network of home storage systems becomes a protagonist in the energy market,” Cornefert said. This will place Sonnen directly in competition with 25 German power firms, including fossil fuel dependent RWE and Uniper.
The new conditions that shape Germany’s solar power market also warrant new policy approaches that take into account falling prices for private investors and systemic changes brought by expanding storage capacities, say observers like Volker Quaschning, a researcher at the Berlin University of Applied Sciences. “There needs to be some sort of a new ‘masterplan’ for the Energiewende.”
Though solar power provided less than seven percent of total power consumption in 2017, it has already significantly impacted the power system structure. The rapid increase in capacity has made available huge quantities of electricity in the middle of the day, when both sunshine intensity and power demand usually are highest –profoundly effecting the balance of amount of supply and upsetting longstanding business models.
At peak output times, up to 40 percent of the Germany power mix can come from solar panels.
According to the Freiburg-based research institute Fraunhofer ISE, the output profile of solar arrays and the usual pattern of power demand match so well that older coal plants, which are too inflexible to respond to short-term fluctuations, have become economically unviable. In fact coal plants may no longer operate at a profit at all once solar capacity has reached a certain threshold, solar energy researcher Quaschning says.
So RWE, to borrow from the film “Good Will Hunting,” how do you like those pineapples?
Zugleich sind die Staatenblöcke in ihrer Haltung zum Multilateralismus selbst gespalten. Das gilt sowohl für die G77 als auch für die EU. In einer wachsenden Zahl von Staaten haben autoritäre Regime die Macht erlangt oder gefestigt, die einen nationalistischen Kurs verfolgen, der im diametralen Gegensatz zu den Werten und Zielen der Vereinten Nationen steht. Bundesaußenminister Heiko Maas hat vor diesem Hintergrund angekündigt, eine „Allianz für den Multilateralismus“ zu schaffen, die über Staatengruppen hinweg allen „multilateralen Überzeugungstätern“ offensteht. Die zweijährige Mitgliedschaft Deutschlands im Sicherheitsrat, die am 1. Januar 2019 beginnt, bietet einen Anlass, diesen Worten Taten folgen zu lassen.
Einen weiteren Anlass bietet der von UN-Generalsekretär António Guterres angestoßene Reformprozess der Weltorganisation, der sich 2019 fortsetzt und möglichweise in ein Gipfeltreffen aus Anlass des 75. Geburtstags der UN 2020 mündet. Bereits jetzt beginnen die Vorbereitungen auf ein Gipfeltreffen der Staats- und Regierungschefs, das im Rahmen des Hochrangigen Politischen Forums für Nachhaltige Entwicklung (HLPF) der UN im September 2019 stattfindet. Dieser Weltnachhaltigkeitsgipfel soll die ambitionierte Umsetzung der Agenda 2030 und ihrer Ziele, der SDGs, voranbringen. Er ist gekoppelt an einen weiteren Klimagipfel, zu dem der UN-Generalsekretär ebenfalls nach New York einlädt.
Was von diesen UN-Gipfeln angesichts der gegenwärtigen weltpolitischen Gemengelage zu erwarten ist, welche Folgen eine weitere Eskalation der politischen Konfrontation in der UN für die Zukunft des Multilateralismus und die Handlungsfähigkeit der Weltorganisation selbst hätte, welche Impulse von der deutschen Politik ausgehen können, um ein Scheitern des Weltnachhaltigkeitsgipfels und eine weitere Schwächung der Vereinten Nationen zu verhindern – diese und andere Fragen sollen auf einem Hintergrundgespräch der Deutschen Gesellschaft für die Vereinten Nationen (DGVN) und des Global Policy Forum (GPF) Europe am 22. Januar in Berlin erörtert werden. Weitere Information >>> hier.
Climate change is becoming increasingly apparent. In 2018, the whole world struggled with droughts, floods and other disasters. Germany also had to contend with systemic distortions, says Paul Hockenos.
Climate change’s new abnormal means reinventing just about everything. Two hotties: agriculture and cargo transport in a warmer world.
2018 was not the first year that the effects of climate change made their presence felt on the continent; scientists have tracked and documented Europe’s gradually warmer summers and outbursts of extreme weather for two decades. But it was definitely the year that Europeans – and Germans above all – experienced it first hand so directly, with repercussions for lifestyle, the food chain, wildlife, and commerce. The upshot is just sinking in: climate change is no longer abstract – and we have to change with it.
The summer of 2018 may or may not have been the hottest on record (some meteorologists claim that July/August 2003 were hotter) but the year is definitely the driest since record-keeping began, particularly in Germany, with drought conditions lasting from April well into November. Rivers dried up, lakes shrank, asphalt roads heaved, forests burned, fish populations died from lack of oxygen in their water, elderly people collapsed, and exhausted livestock was slaughtered before it perished. Next year may not be as brutal, but these blistering summers will happen ever more frequently, say climate researchers.
I caught a glimpse of its destructive force when cycling in the Brandenburg countryside north of Berlin. Even in July, with the worst of the heat wave still to come, the crops languished: half of the sunflowers were torched brown, the others drooping over, heads craned desperately away from the sun. The corn’s growth was stunted, erosion was devouring the parched soil.
Thus far in 2018, Berlin and Brandenburg has experienced about a third of 2017’s rainfall per square meter (300 vs. 854 liter), which will probably be less than 1911’s all-time low of 382 liters. In Lower Saxony, Baden Württemberg, Saxony, and parts of Bavaria, it was even grimmer: large swathes of territory fell into the category of außergewöhnliche Dürre (exceptional drought). Across Germany, it was a disaster for farmers: the potato harvest dropped by 18%, grains yield was down 25%, corn by 47%, and rapeseed by 36%. In some locations, harvests were 50% to 70% less than normal – and in other places nothing was harvested at all.
As of November, 3,700 farms applied for drought aid from government funds, which the federal agricultural ministry stocked up to €340 million. The farmers hope to recover a fraction of their losses – which, though legitimate, is no answer to the problem. Yet, pathetically, it’s the only one the relevant ministry in Berlin has.
Indeed, farmers and experts say that the impact of this year’s extended drought (September and October were dry as a bone) will have serious implications, including for the very near future. Farmers say that there’s no moisture in the soil down to 1.8 meters, and that every square meter of dehydrated soil needs hundreds of liters of water, which will affect what they plant next year – unless a very wet winter replenishes the scorched earth. The water content in the ground soil is too low for autumn plantings, such as rapeseed, which means we already know there’ll be a shortage in rapeseed next year. The price of livestock feed is much higher than usual in autumn and farmers say their feed stocks are lower than ever, which will also push up meat and dairy prices.
The farmers, though, aren’t the only ones who suffered – and now have to think differently about how they will survive in a changed environment. Germany’s rivers dropped so low that commercial shipping along the Rhine, for example, was significantly inhibited; many ships could only carry only 40% of their usual cargos on Germany’s most important commercial waterway. On parts of the Elbe, there was no ship traffic at all. Sandbars never seen before emerged in many places, sometimes revealing undetonated bombs and grenades that had been submerged since Word War II. Gas stations closed their doors because the tankers couldn’t deliver, fuel prices shot up.
Since Germany uses water freight for 80% of its commodity transportation, the biggest cargo clients, including giants such as the chemical conglomerate BASF, are now rethinking their transportation options. Thyssenkrupp, ArcelorMittal and BASF all had to scale down production because of the reduced possibilities for cargo, reported Reuters. The utility RWE ramped down its hydroelectric plant’s electricity generation because of the depleted rivers.
The fact that the farmers and the shippers and industry and the tourists will have to alter their behavior to accommodate a climate-changed environment seems to be setting in (some critics say that German farmers could have, and should have, rethought their crop selection before worse came to worst. The writing had been on the wall since 2003.) The warmer, drier weather implies farmers shifting from water-intensive crops to ones that require less and thrive in warmer regions, such as apples, grapes and plums. These crops actually experienced bumper harvests in 2018. New strategies are under discussion within the German Farmers’ Association for shifting to other produce, keeping soil moist, and halting erosion.
As for cargo, environmentalists have long advocated shifting as much load transport as possible to the more potentially more climate-friendly rail transport — which already runs, in part, on renewable energy. The biggest obstacle to trains carrying more freight, though, is not demand but rather supply: a result of bad management, rail cargo in Germany hasn’t been able to capitalize on the calamity. Nevertheless, BASF is one company is just one company in the process of moving its cargo to trains because of the new undependability of the waterways.
But there’s another catch, too. The steel track rails themselves are affected by such extreme heat. At the heat’s peak, the steel rails expanded and buckled causing Deutsche Bahn to postpone and cancel traffic on certain lines. Rail companies are thus investing in technology that endow the tracks with flexibility to expand without seizing up and cracking.
The take-aways from Europe’s disastrous annus of 2018:
- Climate change is altering our environs and our lives much more quickly and profoundly than we anticipated only recently;
- We’re way behind in formulating climate adaption measures for Europe. Proactive strategies are the order of the day, and not just for agriculture and cargo transportation. This is a huge opportunity for innovation, both in policy terms and for the private sector, and a window to reshape economy and society for the better, sustainably;
- Over the next 25 years, the higher temperatures and the transition to renewable energies will change just about everything in our world. We, and our political elites, have to organize and manage this transition as much to our advantage (or as little to our detriment) as possible – exactly what didn’t happen with globalization.
Cross-posted at Inter Press Service.
The notion of the BRICS (Brazil, Russia, India, China, and later, South Africa) was concocted by Goldman Sachs’ Jim O’Neill. His 2001 acronym was initially seen as a timely, if not belated acknowledgement of the rise of the South.
But if one takes China out of the BRICS, one is left with little more than RIBS. While the RIBS have undoubtedly grown in recent decades, their expansion has been quite uneven and much more modest than China’s, while the post-Soviet Russian economy contracted by half during Boris Yeltsin’s first three years of ‘shock therapy’ during 1992-1994.
Unsurprisingly, Goldman Sachs quietly shut down its BRICS investment fund in October 2015 after years of losses, marking “the end of an era”, according to Bloomberg.
Growth spurts in South America’s southern cone and sub-Saharan Africa lasted over a decade until the Saudi-induced commodity price collapse from 2014. But the recently celebrated rise of the South and developing country convergence with the OECD has largely remained an East Asian story.
Increasingly, that has involved China’s and South Korea’s continued ascendance after Japan’s financial ‘big bang’ and ensuing stagnation three decades ago. They have progressed and grown rapidly for extended periods precisely because they have not followed rules set by the advanced economies.
Industrial policy — involving state owned enterprises (SOEs), technology transfer agreements, government procurement, strict terms for foreign direct investment and other developmental interventions — was condemned by the Washington Consensus, promoting liberalization, privatization and deregulation favouring large transnational corporations.
Well-managed SOEs, government procurement practices and effective protection conditional on export promotion accelerated structural transformation. When foreign corporations were allowed to invest, they were typically required to transfer technology to the host economy.
Countries have only progressed by using industrial policy judiciously when sufficient policy space was available, as was the norm in most developed countries. But such successful development practices have been denied to most developing countries in recent decades. Instead, the North now emphasizes the dangers of industrial policy, subsidies, SOEs and technology transfer agreements, to justify precluding their use by others.
Blocking the Alternative
Instead, corporate-led globalization continues to be sold as the way to develop and progress.
Some advocates insist that global value chain participation will provide handsome opportunities for sustained economic development despite the evidence to the contrary.
Major OECD economies appear intent on tightening international rules to further reduce developing countries’ policy space under the pretext of reforming the multilateral trading system in order to save it.
Trump and other challenges to this neoliberal narrative do not offer any better options for the South. Nevertheless, their nationalist and chauvinist rhetoric has undermined the pious claims and very legitimacy of their neoliberal ‘globalist’ rivals on the Right.
UNCTAD’s 2018 Trade and Development Report emphasizes the link between infrastructure and industrialization. It argues that successful industrialization since 19th century England has crucially depended on public infrastructure. Infrastructure investment is thus considered crucial for economic growth and structural transformation.
The ascendance of the neoliberal Washington Consensus agenda has not only undermined public interventions generally, but also state revenue and spending in particular, especially in the developing world. But even the World Bank now admits that it had wrongly discouraged infrastructure financing, which it now advocates.
Most Western controlled international financial institutions have recently advocated public-private partnerships to finance, manage and implement infrastructure projects. The presumption is that only the private sector has the expertise and capacity to be efficient and profitable. In practice, states borrowed and bore most of the risk, e.g., of contingent liabilities, while private partners reaped much profit, often with state guaranteed revenues.
Unexpected Policy Space
Infrastructure, including both its construction and financing, has been central, not only to China’s own progress, but also to its international development cooperation. China’s financial redeployment of its massive current account surplus has created an alternative to traditional sources of investment finance, both private and public.
The availability of Chinese infrastructure finance on preferential or concessionary terms has been enthusiastically taken up, not least by countries long starved of investible resources. Not surprisingly, this has resulted in over-investments in some infrastructure, resulting in underutilization and poor returns to investment.
The resulting debt burdens and related problems have been well publicized, if not exaggerated by critics with different motivations. Now threatened by China’s rise, Western governments and Japan have suddenly found additional resources to offer similar concessionary financing for their own infrastructure firms.
Thus, not unlike the US-Soviet Cold War, the perceived new threat from China has created a new bipolar rivalry. That has inadvertently created policy space and concessions reminiscent of the post-Second World War ‘Golden Age’ for Keynesian and development economics.
The 24th Climate Change Conference of Parties (COP24) was meant as a time for countries to review and fix the measures of the Paris Agreement. To have any chance to stay below 1.5 ° C and avoid the worst impacts of climate change, countries must commit to drastic greenhouse gas cuts by 2020. Max Proaño takes a look at goals from Brazil, Mexico, Argentina and Costa Rica.
Energy and climate change in Latin America
Although Latin American and the Caribbean region have contributed relatively little over the years to greenhouse gas emissions, they are highly vulnerable to the effects of climate change. Latin America and the Caribbean only produce 5% of global emissions of greenhouse gases – yet its contribution to global figures is increasing due to the industry and transport sectors.
Multiple studies have shown that over half of the region’s population lives in places with high or extreme climate vulnerability risks. These risks include damage to infrastructure, changes in crop and harvest cycles, and human losses caused by natural disasters.
In Latin America and the Caribbean, the main source of emissions is the energy sector (including electricity and heating, manufacturing and construction, and transport), which accounts for 42% of the region’s total emissions. The energy sector is especially vulnerable to climate change, because its hydropower depends on precipitation.
The transportation sector is currently responsible for more than one-third of the carbon dioxide (CO2) emissions in Latin America, and is the fastest growing sector. The International Energy Agency projects that worldwide CO2 emissions from vehicles will increase by a factor of 2.4 (or 140%) from about 4.6 gigatons in 2000 to 11.2 in 2050. For this reason, urban transport represents a key sector for long-run greenhouse gas mitigation efforts.
Nationally Determined Contributions for Latin American countries
China remains the largest emitter of CO2 worldwide, followed by the US. The Latin American country with the most emissions, Brazil, is the 15th in the world (emitting 486,229 kilotons of CO2 annually), followed by Mexico with 472,017.
Below is a short summary of how Brazil, Mexico Argentina and Costa Rica have committed to reducing their emissions, in Paris Agreement jargon their Nationally Determined Contributions (NDC).
Brazil’s targets have been rated “insufficient” by Climate Action Tracker, meaning that they are consistent with increasing global warming between 2 and 3 degrees. The Brazilian goal is to reduce emissions by 37% by 2025 compared to 2005, and 43% by 2030. Brazil’s main sources of emissions come from the forestry and land use sector: with deforestation reductions since 2005 it has already reached the goal of 37%. Nevertheless, deforestation and resulting emissions have begun increasing again in recent years.
The 2018 elections have moved Brazil further away from increasing its climate action and from fulfilling its commitments under the Paris Agreement. During his campaign, Jair Bolsonaro spoke against climate change and the deforestation of the Amazon.
Mexico proposed to unconditionally reduce combined GHG and black carbon (BC) emissions by 25% below business-as-usual by 2030. Mexico also plans a 40% reduction of GHG and BC emissions by 2030, conditional on certain requirements for global agreement and international support.
Mexico recently reformed its General Climate Change Law to include its Paris Agreement commitments on a sectoral level, as well as its long-term adaptation and mitigation goals, and to establish a national emissions market—which was previously only voluntary. Despite that, Climate Action Tracker also rates the Mexican NDC as “insufficient” and suggests that the country will not meet its emissions reduction targets for 2020 and 2030 and will need to implement additional policies.
The new president of Mexico López Obrador, affirmed that his government would not allow fracking, but in contrast, recently he announced his government plans to reinvest in hydropower and increases oil production by 33% to 2024.
Argentina’s new goals include an unconditional absolute emissions reduction target limiting emissions to a 35% increase compared to 2010 levels (excluding what is sometimes called “LULUCF”: Land Use, Land-Use Change, and Forestry). Argentina has also put forward a conditional target to limit emissions to 369 MtCO2e/a by 2030 including LULUCF (322 MtCO2e excl. LULUCF), which equals an increase of 3% compared to 2010, levels excluding LULUCF).
Argentina’s economic crisis has led to changes in the structure of ministries with the objective to decrease government spending. Included in these changes are departments dealing with climate change. It is unclear whether the structural change will have an impact on climate policy. The Argentinian government promotes renewable energies on the one hand, but at the same time in the last year decided to move forward with the exploitation of oil and natural gas from non-conventional fields, such as Vaca Muerta.
Costa Rica is the only Latin American country with an absolute and unconditional emissions reduction target in its Nationally Determined Contribution (NDC). It aims for a 25% GHG reduction emissions by 2030 compared to 2012, and includes Land Use, Land Use Change, and Forestry (LULUCF). Although Costa Rica will need to implement additional policies to reach its proposed 2030 climate targets, which Climate Action Tracker rate as “2°C compatible.”
As I mentioned above, Latin America and the Caribbean have made a historically small contribution to climate change but they are highly vulnerable to its effects. These and other developing countries will need funding for climate change mitigation and adaption in the coming years.
The next COP25 will take place in Chile, where the main aim will be to thrash out the final elements of the Paris rulebook and begin work on future emissions targets. The most vulnerable countries are demanding stronger efforts from developed countries.
Below is a short summary of how Brazil, Mexico Argentina and Costa Rica have committed to reducing their emissions, in Paris Agreement jargon their Nationally Determined Contributions (NDC).
To help Germany to achieve its 2030 climate targets, Greenpeace Energy has made a unique offer to close several open pit lignite mines and power plants in order to create a space for renewable energy. L. Michael Buchsbaum reveals the details.
In late November, Greenpeace Energy, a German utility with over 130,000 customers and is financially and legally independent of Greenpeace itself, announced they were offering to purchase and gradually take over the lignite open pit mines and power plants of RWE AG in the Rheinische Revier, the lignite mining region west of Cologne, with the intent of shutting them down by 2025.
Combined, these power plants and mines comprise the worst CO2 polluting power sources in Europe. In their place, the clean energy firm would construct a series of wind and solar systems with a total combined output of 8.2 gigawatts on or near the former mining areas.
“What we propose is a huge opportunity for the Rheinische Revier and brings us a big step forward in climate protection,” said Sönke Tangermann, CEO at Greenpeace Energy. “Our concept is financially fair for all sides and designed so that redundancies can be avoided.”
While releasing RWE AG from any long term legal, environmental and financial obligations towards the clean up and rehabilitation of the area, Greenpeace Energy would implement this expansion within the framework of a citizen energy concept, in which citizens can participate privately or indirectly via energy companies. Municipal corporations and private companies would also be able to get financially involved.
In concrete terms, Greenpeace Energy proposes to decommission the Hambach opencast mine and the six oldest and least efficient power plant units by 2020, the nearby Inden mine in 2022 along with six further power plant units, and in 2025 close the Garzweiler Mine along with the last three lignite burning units.
In total, the price amounts to about 384 million euros,” said Fabian Huneke of the Analysis Institute Energy Brainpool, which has calculated the cost-effectiveness of the project. Greenpeace recognizes that initially their plan hangs on the profits that could be realized with the lignite power plants on the electricity market until they, because of rising CO2 prices in the near term, would become unprofitable.
While some criticize Greenpeace’s offer as unrealistic, the alternative—business as usual—includes RWE belching vast quantities of greenhouse gasses into the atompshere while ripping up the rest of the Hambach Forest and several neighboring towns and villages. Afterwards, their 40-year plan includes creating a pair of vast lakes filled with billions of gallons of water piped in from the Rhine River (which will be problematic considering the droughts coming due to climate change). In that context, which plan makes more sense?
To usher in their plan, Greenpeace Energy has established a number of new companies for the upcoming tasks including an operator cooperation implementing the Citizens Energy Concept. This firm will construct the wind power and photovoltaic systems with an output of 3.8 and 4.4 gigawatts, respectively, on all suitable former open-cast mines. The green power plants will generate more than 15 terawatt hours of electricity by 2030–a sizeable amount, but in fairness, only around a quarter of what the Rhenish lignite currently supplies.
Though obviously less than current production, power generation from the lignite plants is already set to decline steadily through the early 2030s, falling below the projected level of the citizen energy plants Greenpeace is planning by 2040.
Construction of the entire replacement renewable system by Greenpeace Energy would cost around seven billion Euros and constitute the largest renewable energy project in Europe.
With so much work to be done, the company would contract all employees leaving the RWE lignite division through an employment company. These workers would then be involved in power plant decommissioning and renaturation of the open pit mines. Other workers would be retrained for new careers in renewable energy and other industries.
The proposed employment company would seek to receive funds to finance the structural change in the region from the public structural fund already being proposed by Germany’s Coal Commission. “The project can act as an initial spark for the transformation of this traditional energy region into an energy transition model region,” said Prof. Dr. med. Bernd Hirschl from the Institute for Ecological Economic Research (IÖW).
Vital to the health of the planet, implementing Greenpeace Energy’s plan would result in roughly half a billion fewer tons of CO2 compared to RWE’s current planning, as calculated by the Forum Ökologische-Soziale Marktwirtschaft (FÖS). This would save social costs resulting from climate damage amounting to around 60 billion euros. As early as 2020, emissions will fall by around 13 million tonnes of CO2. By 2030, 338 million tonnes of CO2 will be saved.
In other words, this plan would help put Germany back on track to meeting its 2030 climate goals—currently very much in danger.
Unsurprisingly RWE rejected the offer almost immediately. “You cannot really take the Greenpeace offer seriously,” RWE said in an emailed statement to the Montel news organzation, arguing the proposal was detrimental to the interest of the firm, as well as regional and federal German authorities, which would be asked to finance part of this deal.
As the take-over plan continues to gain media attention, another arm of Greenpeace in coalition with several farming groups and other organizations, has filed suit against the German government for failing to maintain its obligations and simply “giving up” on trying to achieve cuts in greenhouse gas emissions set out under the country’s own climate target, as well as under European law.
While pledged to take action to slash CO2 emissions by 40% by 2020 compared to 1990 levels, earlier this year the government admitted that it was now expecting to achieve only 32%. This shortfall of 8 percentage points is equivalent to about 100 million tonnes of carbon dioxide—indeed Greenpeace’s plan of shutting down the nation’s filthiest lignite plants could help Germany back towards that initial course.
Am späten Samstagabend war es endlich vorbei: Nach zwei langen und zähen Verhandlungswochen mit wenigen hoffnungsvollen Momenten und vor allem viel Frust und Ärger ist die UN Klimakonferenz COP 24 im polnischen Katowice zu Ende gegangen. Das Pariser Klimaabkommen lebt noch – auch drei Jahre nach der COP 21. Das ist die gute Nachricht. Denn es ist gelungen, ein Regelwerk zur Operationalisierung dieses Abkommens zu verabschieden. Aber auch nur, weil viele wichtige und substantielle Themen auf’s nächste Jahr vertagt wurden.
Die schlechte Nachricht: Auch wenn alle Länder die Zusammenfassung für Entscheidungsträger/innen des Sonderbericht des Weltklimarats zu 1,5 °C einstimmig angenommen haben, gibt es nicht Hoffnung, dass unsere Regierungen ihre jeweiligen nationalen Anstrengungen noch einmal gewaltig erhöhen werden – aber genau darauf haben sie sich ja eigentlich verpflichtet.
Was sie genau in Katowice vereinbart haben, was auf 2019 verschoben wurde, welche Themen inzwischen komplett von der Agenda fallen, was sonst noch so auf einer COP passiert und was das alles für die kommenden Monate und die Zukunft des Weltklimas heißt – das berichten wir in einer ausführlichen Analyse der COP 245-Ergebnisse Anfang Januar hier auf Klima der Gerechtigkeit. Stay tuned:-)
Wer schon jetzt mehr nachlesen mag, dem / der empfehle ich die folgenden Pressemitteilungen und Statements (man beachte die unterschiedlichen Lesarten – waren die wirklich alle auf der gleichen COP…?;-)
Greenpeace: Interview mit Greenpeace-Geschäftsführer Martin Kaiser zum Ende des UN-Klimagipfels: Geht’s so? Geht so…
Und Greenpeace International: COP24 ends without firm promises to raise climate action and ambition
Climate Action Network International: COP24: Countries struggle to muster political will to tackle climate crisis
Center for International Environmental Law (CIEL): Katowice COP24 Outcome Incompatible with Paris Agreement. Ambition, Equity, and Human Rights Left Behind in Poland Climate Talks
Climate Land Ambition Rights Alliance (CLARA): Statement zum Ausgang der COP 24
2019 (bzw. ggf. auch erst Anfang 2020 – über den genauen Zeitpunkt der COP 25 wird noch verhandelt) ist dann Chile dran. Und vielleicht bringen dann neue Perspektiven vom anderen Ende der Welt wieder mehr Schwung und Hoffnung in den Klima-Prozess?
Wir machen jetzt auf jeden Fall erstmal eine kleine Verschnaufpause. Weltrettung ist anstrengend. Wir wünschen erholsame, friedliche, plastikfreie Feiertage und einen guten Rutsch in ein gesundes Neues Jahr 2019!
Exterminator Gene Drives und das Recht auf „Free, Prior and Informed Consent“ – ein neuer Film über das umstrittene Target Malaria Projekt
Vor wenigen Wochen erst, Ende November, haben die 196 Mitgliedsstaaten der CBD haben eine strenge Regulierung von Gene Drive Technologien beschlossen. Nach intensiven und kontroversen Diskussionen einigten sich die Delegierten auf eine Vereinbarung, die Regierungen u.a. dazu verpflichtet, vor einer Freilassung von mit Gene Drives manipulierten Organismen die Zustimmung von „potentiell betroffenen indigenen und lokalen Gemeinschaften“ einzuholen.
Warum das so wichtig ist, zeigt ein neuer Kurzfilm, der heute erstmals veröffentlicht wurde:
Target Malaria, a research consortium that aims to eradicate malaria-carrying species of mosquitoes using new genetic modification tools, does not have proper consent from communities for its experiment. That is the main message of a new short film that is being released this week.
“A Question of Consent: Exterminator Mosquitoes in Burkina Faso” documents conversations with residents of the areas where Target Malaria is conducting tests, as well as opposition from civil society groups in the region.
The film’s revelations pose problems for the project, backed by the Bill and Melinda Gates Foundation, the Open Philanthropy Project and the US Military.
Lesenswert ist auch der Meinungsbeitrag, den die Filmemacherin Zahra Moloo heute begleitend veröffentlich hat: Cutting Corners on Consent.
Ohne massiven Druck der Zivilgesellschaft und Öffentlichkeit wäre es nie dazu gekommen. Aber heute in den frühen Morgenstunden war es dann soweit: Europäische Kommission, Rat und Parlament haben auf einen Kompromiss in Sachen Single Use Plastic Directive geeinigt. Nach dem heutigen Beschluss (siehe auch PM der DUH)
„sollen Einwegartikel wie Strohhalme, Besteck, Wattestäbchen und Einwegbecher und Lebensmittelbehälter aus expandiertem Polystyrol verboten werden. Außerdem wurden Sammelziele und Mindesteinsatzquoten für Recyclingmaterial in Einweg-Plastikflaschen festgelegt. Die Tabakindustrie wird verpflichtet, sich zukünftig an den Kosten zur Entsorgung von Zigarettenstummeln zu beteiligen. Die Richtlinie tritt voraussichtlich im Frühjahr 2021 in Kraft.“
Das Europäische Parlament hatte am 24. Oktober für eine sehr weitgehende Liste an Verboten, Reduktionszielen und Maßnahmen gestimmt (siehe dazu meinen Bericht). Hier gelang der Plastik-Lobby zwar in den letzten Wochen in einigen Punkten die Einflussmaßnahme über verschiedene Mitgliedstaaten (darunter auch Deutschland). Aber das Endergebnis ist immer noch mehr als zufriedenstellend.
Die Rethink Plastic Alliance listet das Erreichte wie folgt auf:
The final measures adopted include:
- Bans on several single-use plastic items including plates, cutlery and expanded polystyrene food containers and beverage cups
- Ensuring manufacturers pay for waste management and clean-up of several single-use plastic items, including cigarette butts and fishing gear
However, the agreement falls short of what is needed to fully tackle the plastics crisis in key areas including
- No binding EU-wide target to reduce the consumption of food containers and cups, and no obligation for EU countries to adopt targets
- A delay of four years on ensuring 90% of plastic bottles are collected separately – from 2025 to 2029
These measures apply to all single-use plastics listed in the Directive’s Annexes including bio-based and biodegradable plastics.
Und noch einmal genauer – was ist gut und was ist schlecht daran?
A EU-wide ban of single-use plastic cotton buds, straws, plates, cutlery, beverage stirrers, balloon sticks, oxo-degradable plastics, and expanded polystyrene food containers and beverage cups
Extended Producer Responsibility schemes meaning manufacturers (including big tobacco companies and top polluters from the packaging industry like Coca Cola, Pepsico and Nestle) pay for the costs of waste management, clean up and awareness-raising measures for certain single-use plastics including plastic cigarette filters – the most littered item in Europe (by January 2023 for most items)
A possibility for EU countries to adopt market restrictions for food containers and cups for beverages
An obligation for EU countries to reduce post-consumption waste from tobacco product filters containing plastic
For fishing gear, an Extended Producer Responsibility scheme and a requirement for Member States to monitor collection rates and set national collection targets
Ensure all beverage bottles are produced from 30% recycled content by 2030
Labelling on the presence of plastics in a product and resulting environmental impacts of littering, and on the appropriate waste disposal options for that product
What’s not so good:
No binding EU-wide target to reduce the consumption of food containers and cups, and no obligation for EU countries to adopt targets either; instead, countries must “significantly reduce” their consumption, leaving it vague and open
A delay of 4 years in achieving the 90% collection target of beverage containers, from 2025 to 2029, with an intermediary target of 77% by 2025
Allowing for EU countries to choose to achieve consumption reduction and certain EPR measures through voluntary agreements between industry and authorities
A 3 year delay to make sure plastic drinks containers have their caps/lids attached to the containers – from 2021 to 2024
The Czech government follows the example of the German RWE-Innogy to legitimize the split of CEZ into nuclear and non-nuclear parts. Jan Ondrich takes a look.
In my previous blog I wrote about possible funding for a new nuclear plant in the Czech Republic. One of the possibilities presented by the Czech government draws inspiration from division of German utilities into parts exposed to the carbon risk and carbon-free units.
It seems the government is more inclined to follow the example of RWE-Innogy. The government wishes to offer minority participation of 49% in the new daughter company to investors, and increase its shareholding in the parent company to 100%. The government is considering the following options for the split of the company.
Option One: Nuclear vs other
In the first option the government would control 100% of nuclear assets, including the new nuclear project. The remaining assets, such as thermal generation, hydro, grid, renewables and sales would be put into a special purpose vehicle in which the state would own 51%. Table 1 below summarizes assets owned by the two companies and their respective earnings in comparison with the current status.
If the government chose to split CEZ into nuclear and non-nuclear parts, the minority shareholders may not necessarily be worse off when considering their share of the company’s earnings. Currently the minority shareholders have a claim on 30% of the company’s earnings, that is CZK 16.2 billion (around $7.12 million). After the split their share of the company’s earnings would slightly increase to CZK 17.5 billion ($7.7 million USD).
However, the risk profile of cash-flows would change fundamentally. The non-nuclear company would be more exposed to commodity risk, in particular to carbon prices (which are currently rising atmospherically). The carbon intensity of the non-nuclear part of the company would almost double from its current 0.44 tones per MWh to 0.8 tons per MWh. This would make the non-nuclear company one of the largest emitters of carbon per MWh in Europe, exceeding both RWE and Uniper.
Option Two: Conventional power vs other
The second option presented by the government is for a company (100 percent owned by the state) which would encompass nuclear, conventional and hydro generation. The grid, sales, energy efficiency service company (ESCO) and renewables would be owned by a daughter company in which minority investors would own a 49% share. Table 2 below summarizes key statistics for this option.
In this option minority shareholders would be worse off with respect to their share of earnings, which would decrease to CZK 14.5 billion ($6.4 million USD). However, the overall risk of the company would decline. The company would be exposed to few commodity risks as the vast majority of generation assets would be carbon-free renewables, and more than half of the company’s earnings would come from regulated power distribution business.
This would probably lead to changes in the shareholding structure of minority investors. Those investors seeking higher returns through exposure to commodity prices may sell out, but on the other hand the company could become attractive to pension fund types of investors seeking stable returns with little exposure to commodity risks.
It appears that the second option would be a better way of dividing CEZ if the government ever decided to push the button and start the process. The new daughter company would own stable, regulated power distribution and mostly renewable and co-generation energy sources with almost no exposure to carbon risks. As a result, the company could attract different class of investors who would not have invested into CEZ previously because of its nuclear and coal assets. Those investors, such as pension funds, have lower risk requirements than investors seeking exposure to power generation assets, which may decrease the overall cost of capital for the company.
To split the company into carbon-intensive and carbon-free parts appears to make sense especially as the cost of carbon has been increasing. In Germany, for example shares of Innogy overperformed those of RWE over the past year (Innogy up by 5.86%, RWE down by 15.03%). Likewise, shares of EON have overperformed those of Uniper, albeit both are down this year (EON down by 8.56%, Uniper down by 10.16%).
Second part of a series, 2018 TRADE AND DEVELOPMENT REPORT: Interview with UNCTAD’s Richard Kozul-Wright, from the Real News Network.
RICHARD KOZUL-WRIGHT: Here’s a big question that I think needs to be honestly and frankly addressed. If state ownership, technology transfer agreements and subsidies work to sustain growth and eliminate poverty and these policies have taken 500 million people out of poverty in China, and by implication, because of China’s connections to other developing countries, another 100 million people out of poverty in other parts of the developing world: Why do advanced economies want to deny their use to other developing countries? Given their success, given what they have achieved in terms of economic performance and social performance, why would you want, why would you want to eliminate these options from the policy toolkit of developing countries? It’s a very serious question that needs to be, I think, asked in a more frank and honest way than has so far been the case.
Obviously, for us least in terms of the TDR, it’s about rethinking multilateralism in progressive ways. It’s a plague on both your houses This is not an issue of do we support regressive nationalism, which we’ve already seen in various formations. Nor is it a support for the kind of corporate cosmopolitanism that has dominated the multilateral discussion for the last…We need some kind of alternative that is neither of these options. And I’ll finish here. We, in the Trade and Development Report this year, have gone back to the Havana Charter, which as many of you know, was the forerunner of the GATT, indeed more ambitious of the multilateral discussions in 1947 and 1948 than the GATT, that was signed up to by 50 odd countries, both developed and developing. Indeed, the majority of countries that signed up the Havana Charter were from the developing world. It was eventually rejected by the U.S. Congress and was shelved, but it is a remarkable document.
LYNN FRIES: It’s The Real News, I’m Lynn Fries.
And this is part two of a conversation with Richard Kozul-Wright on Power, Platforms and the Free Trade Delusion, UNCTAD’s 2018 Trade and Development Report. The opening clip featured Richard Kozul-Wright presenting the report at the Board meeting at the United Nations Conference on Trade and Development. As mentioned in part one, both the report and the UN institution are better known by their acronyms, the TDR and UNCTAD, respectively. Richard Kozul-Wright is lead author of the 2018 TDR and Director of the Division on Globalization and Development Strategies at UNCTAD. Thanks again for joining us, Richard, welcome.
RICHARD KOZUL-WRIGHT: Thank you.
LYNN FRIES: The report emphasizes the link between infrastructure and industrialization, and that since 19th century Great Britain through the 21st century China, a central building block of successful industrialization has been public spending on infrastructure. Talk about that.
RICHARD KOZUL-WRIGHT: I think one of the great tragedies of the neoliberal agenda as it’s eviscerated public spending, particularly in the developing world, has been the way in which infrastructure finance has been crowded out of the resource mobilization discussion. And it’s taken China, essentially, to put this back onto the agenda. Infrastructure has been a central feature of the Chinese development model. The Washington-based institutions, we think, have a fairly simplistic view of public-private partnerships as the way to manage infrastructure projects, which we don’t find to be particularly convincing. The report is really calling for a return to the kinds of thinking that were commonplace in the debates on infrastructure in the 1950s and the 1960s. That is, linking infrastructure projects to the wider issue of structural transformation and economic growth.
So the report is a plea to go back and revisit the kinds of debates that have unfortunately dropped off the development agenda under the very simplistic belief that if you allow the private sector and market forces to rein free, then somehow infrastructure will spontaneously become a part of a healthy growth and development path, which is simply not the case.
LYNN FRIES: Enthusiasts in favor of global value chains in the structure of global trade argue global value chains provide developing countries with opportunities for economic advancement and development. You presented a far different narrative when presenting the TDR to the UNCTAD Board at the annual meeting. Here’s a brief clip.
RICHARD KOZUL-WRIGHT: The idea that value chains offer this opening to climb up the value chain, diversify your economy, upgrade, is not backed up by strong evidence outside of the East Asia region.
LYNN FRIES: Tell us more about that.
RICHARD KOZUL-WRIGHT: Yeah. It’s the big promise of global value chains linked to comparative advantage arguments, that somehow those countries with low skilled, low wage labor would be the big winners of this hyper-globalized world. And talk about the BRICS and emerging economies has being hard-wired into that narrative about the big winners from hyper-globalization. And as you said, we show that there is not very much evidence to support this, with one big exception. And the big exception, of course, is China. When you look at the share of the profits of the top 2000 TNCs in global income, the only part of the world that has actually made headways into that elite club, other than the advanced economies themselves, is of course, corporations from East Asia, including China.
And so, if you take the BRICS as being an indication of the rise of the South and you take China out of the BRICS acronym and you’re left with the RIBS – Russia, India, Brazil, South Africa – their share of global income over the last 20, 25 years has increased, but not significantly and certainly not to have generated the kind of hype and, to some extent, hysteria that we have seen around the notion of emerging economies. So the story of the rise of the South, as we see it, still remains fundamentally an East Asia story, with China, in many respects, simply replicating the experience that began with Japan in the 1950s and was repeated by Korea and other countries in the 1960s and the 1970s.
Now, from our point of view of course, it’s an interesting story if China has been able to buck the trend of hyper-globalization. The question is, how did it do it? And it turns out it did it by not following the rules of hyper-globalization as promoted within the capitals of the advanced economies, whether that’s from Washington or Paris or Brussels. So we know now that the Chinese have been very successful in using industrial policy, including the use of subsidies. We know they’ve been very successful in using state-owned enterprises as part of their development model. We know that they’ve been very good at ensuring that if international corporations come to their country to make profits, they have certain responsibilities in terms of transferring technology to the to the host economy.
Now, what is worrying for us, of course, in the current discourse that we hear about reforming the multilateral system, is all the things that worked for China and lifted 500 million people out of poverty in China, and to some extent even more people out of poverty outside of China given China’s connections with other parts of the developing world, these are the very elements that the advanced economies want to preclude other developing countries from using. So now, the endless rhetoric that we hear about, the dangers of state-owned enterprises, the problems of industrial subsidies, the problems with technology transfer agreements, are on the table for tightening the rules to prevent those being used in the future.
And that has to be a worrying trend, given the track record of successful use of these policies in the Chinese case. And it’s one of the great ironies here, that hyper-globalization has been sold to many as a way of alleviating poverty. But it turns out that the only way that it can work to alleviate poverty is if countries have sufficient policy space to be able to make use of its benefits and to mitigate its problems. And now, we have an agenda that is trying to reduce the policy space further of countries to ensure that they can’t do that in the future. It’s a very troubling and clearly hypocritical agenda that is emerging under the rhetoric of reforming the multilateral system.
LYNN FRIES: In a recent article you wrote, and I quote, “China’s success is exactly what was envisaged in the 1947 United Nations Conference on Trade and Employment in Havana, where the international community laid the groundwork for what would become the global trading system. The difference in discourse between then and now attests to how far the current multilateral order has moved from its original aims.”
RICHARD KOZUL-WRIGHT: It’s one of the great tragedies, I think, of discussion around the crisis and multilateralism, is just how much people have forgotten about the origins and evolution of this system. So the current tensions in the global trading system are essentially presented as a threat to a 70 year old international economic order that was hatched in the late 1940s and was gradually perfected over the subsequent seven decades. And that’s clearly not the case. The kind of international order that was designed in the immediate post-war period essentially died in the late 1970s and the early 1980s, when policymakers in the advanced economies gave up on full employment as a central goal of their agendas, when financial markets were rapidly and in many respects recklessly deregulated, when the mixed economy, the idea of a mixed economy became a dirty phrase in which the public sector had a central role in the organization of a healthy and balanced economy.
So that order died in the late 1970s and early 1980s. But one of the high points, in my opinion, of those early negotiations was the Havana Charter. 55 countries that negotiated the Havana charter, or 53, 54, signed up to that in 1948, so 70 years ago this year. The majority of those countries were actually developing countries, so it was a really genuine dialogue between the North and the South that gave rise to the Havana Charter. And of course, the charter eventually died when the U.S. Senate, the U.S. negotiators having originally signed up to it, but when the U.S. Senate essentially killed off the charter at the end of the 1940s, early 1950s. And all that remained were the GATT rules that became the basis for structuring trade rules in the postwar order.
LYNN FRIES: I just want to give viewers a very brief overview of the chronology of the history of the multilateral trade system that you’re going to be referring to. So from 1945 to 1947, over 50 countries began to create an International Trade Organization, the ITO. And in 1947 in Havana, 56 countries started negotiating the charter for the ITO. And the Final Act of that charter, the Havana Charter, was signed in 1948 in Havana. But the Havana Charter and its policy goals of full employment and domestic industrialization for structuring trade rules in the post-war order, as you said, got shelved. The International Trade Organization, along with its charter, the Havana Charter, was shelved.
Instead, from 1948 to 1994, a provisional arrangement, the GATT, the General Agreement on Tariffs and Trade, was the only multilateral instrument governing international trade. And as you said, the GATT rules became the basis for structuring trade rules. The last round of multilateral trade negotiations under the GATT, the Uruguay Round, was from 1986 to 1994. The Uruguay Round led to the end of the postwar order governed by the General Agreement on Tariffs and Trade, replacing it with the creation of the World Trade Organization, or WTO. The World Trade Organization was established by the Uruguay Round in 1995 and governs the multilateral trade system into the present. So what made the original aims of the Havana Charter so different from the current multilateral order?
RICHARD KOZUL-WRIGHT: The Havana Charter itself was far more ambitious than the GATT rules. As you said, it recognized that a healthy trading system could only evolve out of an economy that guaranteed full and stable employment in which aggregate demand was at a level that could generate full and decent work. It recognized that there were distributional issues always on the trade agenda that had to be managed at the international level. They were, at that time, seriously concerned about the use of restrictive business practices in distorting the international trading system and sought ways of dealing with those restrictive business practices by large international firms.
And as you said, they recognized this central role for industrialization in the South as part of a healthy trading system and they found ways to ensure that industrial policy and the use of various tools of industrial policy would be a legitimate part of the international trading rules. And all that was part of the Havana Charter that was negotiated by these 50 odd countries after the end of the Second World War. And to some extent, these features were retained in a more informal way in the post-war architecture, but not really as part of the rules of the system. Obviously, with the rise of neoliberalism, the Uruguay Round, the direction of trade rules was in the opposite direction. Concerns about unemployment were essentially removed from the discussion, industrial policy became a dirty word, particularly for developing countries.
LYNN FRIES: I have one more quote of something you wrote marking the 70th anniversary of the Havana Charter and then I’m going to ask you for a concluding thought. “The silence on the 70th anniversary of the Havana Charter speaks volumes about the current era’s approach to multilateralism, not simply in the contrasting levels of ambition, but in subverting its underlying logic by assuming that by opening up to trade and private capital flows, full employment and economic development will automatically follow. Evidence continues to favor the drafters in Havana.” And your concluding thought?
RICHARD KOZUL-WRIGHT: I strongly believe that despite all the changes that have happened in the global economy since 1948, there is a serious need to take a look again at what the Havana Charter was trying to do in terms of generating a more balanced and healthy trading system and to find ways of replicating those kinds of ambitions in line with the changes that we’ve seen in the second half of the 20th century and the beginning of the 21st century. And the report tries to make a case for revisiting the Havana Charter in light of the challenges of the digital economy, in light of the challenges of environmental and financial stress that we’ve seen over the last few years.
LYNN FRIES: Richard Kozul-Wright, thank you.
RICHARD KOZUL-WRIGHT: Thank you, Lynn.
LYNN FRIES: And thank you for joining us on The Real News Network.
2018 saw temperatures, natural disasters and CO2 emissions hit record highs. Meanwhile, our world leaders are procrastinating, says Michał Olszewski.
Each new climate summit is sadder than the last.
The clock is ticking. We are already well aware of what needs to be done to stop climate change. Each passing year brings a mass of evidence of how devastating the effects of global warming will be … sorry, are. This year’s delegates should have observed a minute’s silence for the victims of the fires that devastated California. The state’s years of drought, high temperatures and constantly falling water table led to one of the largest post-war ecological disasters in the United States.
There is a paradox that politicians meeting at successive climate summits are extremely reluctant to mention. On the one hand, our knowledge of climate mechanisms is growing exponentially, and successive IPCC reports clearly show the direction in which we should be heading. On the other hand, global CO2 emissions are growing every year.
The detailed “Global Carbon Project” report leaves not even the slightest illusions on the subject. Since the beginning of the 21st century, emissions have been growing continuously (though at different rates), with a temporary leveling off in 2014–2016. This year and last saw rising emissions again. At the same time, the average temperature is increasing year on year. Warm … getting warmer … hot!
This glaring contradiction is (at least officially) spoken about with extremely reluctance. The reason is simple: politicians and negotiators would then have to admit that these series of meetings are primarily an act of diplomatic procrastination, a delaying tactic. The fear of the economic consequences of firm decisions is greater than the fear of the consequences of global warming. But nobody will just come out and say it. This is why the Chinese – masters of diplomacy – have for years taken all the top prizes in emitting CO2 while at the same time admitting that a global reduction in emissions is needed.
So what is the way out? For as long as I can remember, climate summits end up announcing … the next climate summit, where binding decisions will definitely be made.
This time is no different, with one exception. I am thinking of the speeches by leading Polish politicians who, by all indications, have chosen to abandon the rules of diplomatic games and squarely voiced their frank opinions on the fight against global warming. In his speech, President Andrzej Duda repeatedly avoided the truth, saying, among other things, that there are enough coal resources for Poland for 200 years, that we are an energy-sovereign country, that greenhouse gas emissions in Poland are falling, that burning coal does not stand in opposition to reducing emissions.
I am not going to mention each of these misunderstandings, mistakes and outright untruths. It is clear, however, where they come from. Poland’s position is as follows: we will continue to base our economy on coal and it’s nothing to do with you. Let others take care of climate protection; in Poland, our business is our own. If I were a representative of the drowning state of Kiribati, I would have taken the host’s position as a slap in the face. Probably the only one to go further in denying reality was Trump, who advised the residents of fire-ravaged California to … rake leaves.
I can’t exclude the possibility that Andrzej Duda was saying out loud what many national leaders will only say in the privacy of their offices. For climate negotiations, however, such formulations are devastating, as they show that there are countries that only want to play a blocking role in the negotiations. And what’s more, they are very happy in that role.
So, see you at the next climate summit. The next one is apparently going to be really decisive.
As delegates from around the world met in Katowice, Poland at the COP 24 Climate Summit, it’s clear that renewable energy is getting cheaper and being adopted faster than ever before. However, emissions continue to rise as investors keep pouring money into coal and other fossil fuels. L. Michael Buchsbaum takes a look.OP24: Governments should take immediate action to reduce CO2 emissions while mining coal (Public Domain)
Ahead of the conference, several studies were published that suggested global emissions were still on track to rise for a second year in a row. The Global Carbon Project’s report, titled “Global Energy Growth Is Outpacing Decarbonization,” appeared on Dec. 5 in the peer-reviewed Environmental Research Letters.
More detailed data was published simultaneously in Earth System Science Data. Led by Stanford University scientist Rob Jackson, it estimates that global carbon dioxide emissions, mainly from fossil fuel sources, will reach a record high of just over 37 billion tons in 2018, an increase of 2.7 percent over emissions output in 2017. That compares to 1.6 percent growth a year earlier. Moreover, emissions from non-fossil sources, such as deforestation, are projected to add another 4.5 billion tons of carbon emissions to the 2018 total.
While emissions could have been worse without the increases in renewables, energy demand is still outpacing growth in both renewables and energy efficiency.
Renewables growth strong in 2017, 2018
2017 was characterized by the largest ever increase in renewable power capacity, falling costs, increases in investment and advances in enabling technologies, according to REN21. Renewable power generating capacity saw its largest annual increase ever in 2017, raising total capacity by almost 9% over 2016. Overall, renewables accounted for an estimated 70% of net additions to global power capacity in 2017, due in large part to continued improvements in the cost-competitiveness of solar PV and wind power, and estimates show that number is sharply increasing through 2018.
Solar PV led the way, accounting for nearly 55% of newly installed renewable power capacity in 2017. More solar PV capacity was added than the net additions of fossil fuels and nuclear power combined. Wind (29%) and hydropower (11%) accounted for most of the remaining capacity additions. In many places, according to other studies, new wind farms are now cheaper to build than keeping an existing coal fired power plants running.
Institutions send signal for coal phase-out
Fearing the cost of inaction on climate change, a group of institutions managing $32 trillion issued a stark warning during COP24, demanding that governments make immediate steep cuts in carbon emissions while phasing out coal.
Without a major course correction, they warn the world will face a financial crash several times worse than the 2008 crisis. Including some of the world’s biggest pension funds, insurers and asset managers, they are calling on governments to end fossil fuel subsidies and introduce substantial taxes on carbon. S&P Global, historically an influential source for fossil fuel investors, also published a report looking “at the economic implications of climate change, why progress in reducing our emissions has been slow, and ways policymakers and markets can still act to mitigate global warming” while advocating for a more aggressive strategy going forward.
“The long-term nature of the challenge has, in our view, met a zombie-like response by many,” said Chris Newton, of IFM Investors that manages $80bn and is one of the 415 groups that has signed the Global Investor Statement. “This is a recipe for disaster as the impacts of climate change can be sudden, severe and catastrophic.”
Insurers are growing increasingly worried that they won’t be able to cover losses from increasingly worse climate change fuel events. Investment firm Schroders said there could be $23tn of global economic losses a year in the long term without rapid action. Put into perspective, this permanent economic damage would be almost four times the scale of the impact of the 2008 global financial crisis. Standard and Poor’s rating agency also warned leaders: “Climate change has already started to alter the functioning of our world.”
Another investor demand on governments is to introduce “economically meaningful” taxes on carbon. Most are below $10 per tons, but needed to rise to up to $100 in the next decade or two, the investors said.
Who is still investing in coal?
Other reports released in time for the UN summit show that several major US, Chinese and Japanese financial institutions are still unabatedly pouring money into new coal plants.
According to Coalexit.org, since the Paris agreement was signed in 2015, some $500 billion has been sunk into such investments helping put the IPCC’s target out of reach. Since then over 92,345MW of new coal power plants have started operating. This is as much as all of Japan’s and Russia’s coal plants put together (Coal Swarm). What is even more shocking, another 670,000 MW are currently in planning or already under construction in 59 countries.
Just this year, the research identifies 1,211 institutional investors with a total investment of US $139.4 billion in coal plant developers. These are investments held by pension funds, insurance companies, mutual funds, asset management companies, commercial banks, sovereign wealth funds and other types of institutional investors.
The research finds that the largest seven investors are responsible for 30% of the investments in the 120 coal plant development companies (as identified by urgewald in October 2018). The so-called“Dirty 30” institutional investors together account for 57% of investments in 120 fossil fuel companies. To search this year’s finance data click here.
The largest single offender is unsurprisingly the US-based BlackRock, which invested over $11 billion in coal and other dirty sources. Two other US-based groups, including Vanguard ($6.2 billion) and Capital Group ($4.2 billion) made the top 10. As emissions rose sharply in the U.S., it was no surprise that President Trump sent only a small delegation to Katowice, mainly to officiate a ludicrous “Clean Coal” side panel that was mostly attended and disrupted by protestors.
Plans for a new nuclear power plant in Czech Republic are currently on the brink of collapse. Jan Ondřich explains the remaining options.
The Czech government still remains hopeful that it can start construction of a new nuclear power plant. But the Czech utility CEZ, which is listed on Prague stock exchange and in which the government holds 70%, will not be able to build such a plant without some form of a state guarantee – the investment cost may easily reach a level of current market capitalization of the whole company, that is some USD 200 million.
The government has considered various options, such as funding with the state budget, or the British-style contract for difference. This style of contract, which stipulates that the seller pays the buyer the difference between the value of an asset and the value at its contract time, means that when the market price for electricity generated by a CFD Generator (the reference price) is below the Strike Price set out in the contract, payments are made by the company (see diagram below).
The contract for difference guarantee has been rejected outright by Prime Minister Babis when he was heading the finance ministry in the last government. This has left the Czech government stuck between a rock and a hard place: the litigation risk from minority shareholders if the government ordered construction of the plant irrespective of its economic impact, and the threat that direct fiscal help can amount to illegal state aid under EU competition policy.
In the end the Czech government has only a few options if it wishes to go ahead and build the plant with recourse to the state balance sheet.
One option put forward by the Ministry of Industry and Trade is for the Czech state to set up a new special-purpose vehicle company of which it will own 100%. This company would acquire the new nuclear project from CEZ. In order to capitalize the company, the Czech state may sell a minority share to CEZ itself, to the EPC contractor or to other third-party investors.
This arrangement would enable the Czech state to raise its equity contribution by issuing bonds backed by the state budget. In addition, the Czech state could guarantee loans lent directly to the SPV by providing a parent-company guarantee – the lenders would have recourse directly against the state budget in case the SPV become insolvent. Such structure could enable the state to fund a new plant even without price floor mechanism if the lenders were comfortable enough with recourse to the state budget. However, it is unlikely that the state would find an equity investor for the minority share without guaranteed power price offtake since payback for the equity investor would solely depend on power price.
Another option proposed by the ministry draws inspiration from splitting of a German utility E.ON. In this scenario CEZ would be divided into two parts. Existing shareholders would be left with conventional power generation (a sort of Uniper), while the state would own carbon-free portfolio – that is renewables (mostly large hydro in the Czech Republic), grid and nuclear generation. The state-owned part of CEZ would then be capitalised through a state budget and would be able to borrow against a parent company guarantee provided by the government.
This scenario would also enable the construction of the new plant without power price guarantee if the Czech state was willing and able to provide enough equity for the construction and the lenders would be comfortable with the parent company guarantee. Just like in the first option, the government would find it difficult to attract co-investors without a firm guaranteed power price floor.
The “splitting” scenario presents one additional challenge – that is agreeing with minority shareholders on relative valuation of the two parts of CEZ. The state would end up owning the part of the company which has been generating the most shareholder value – the grid and the legacy nuclear assets. Minority shareholders would be left with largely lignite-fired generation fully exposed to the double risk of carbon and power prices. The cost of settling with minority shareholders would have to be included in the cost assessment of the new nuclear project.
It remains to be seen how the state can fund its new nuclear plant, and what the costs will be for taxpayers. In any case, it would be far cheaper to invest in renewable energy in the long run.
Portland, Oregon, will take $30 million a year from large corporations and spend it on climate protection. Support for the city’s most vulnerable populations is at the heart of the plan. Ben Paulos outlines planned initiatives.
Voters delivered a strong rebuke to President Donald Trump at the polls in early November, with Democrats flipping control of the US House of Representatives and gaining seven state governor seats.
This “blue wave” is likely to lead to gains in clean energy and climate policy, since the issues have become increasingly partisan, and increasingly the domain of the Democratic Party.
But voters also spoke for themselves on climate issues, through state and local ballot initiatives. While overall results were mixed, a new clean energy fund in Portland, Oregon, is a bright spot, and potential harbinger of things to come.
State roundup: mixed results
The 2018 campaign was notable for the number of candidates explicitly running on clean energy issues. Sean Casten, cofounder of an industrial heat recovery business, rousted incumbent Peter Roskam in Illinois, while New Mexico governor-elect Michelle Lujan Grisham ran a TV commercial showing her climbing a wind turbine.
Voters weighed in on a number of state and local ballot measures to promote renewable energy and cut oil and gas drilling. The results were not all good: a carbon tax failed in Washington state, limits to oil and gas drilling failed in Colorado, and a 50 percent renewables mandate failed in Arizona.
On the positive side, Florida voters limited offshore oil drilling, California voters rejected a repeal of a gas tax increase, and Nevada voters took the first step for a 50 percent renewables mandate (they will need to approve it again in 2020 to amend the state constitution, unless the legislature passes it in the meantime).
The Portland Fund
Perhaps the brightest result is approval of a local clean energy fund in Portland, Oregon. By a 65 to 35 margin, voters imposed a 1 percent revenue tax on businesses that do over $500,000 in local sales and $1 billion in national sales per year. Sales of basic groceries, medicines, and health care services are exempted.
While hundreds of cities and elected officials have made pledges and plans to cut carbon, only a handful have earmarked funding to take action. Boulder, Colorado voters approved a “climate action tax” in 2007, raising $1.8 million per year to pay for energy efficiency programs. Boulder is in the midst of a hostile takeover of Xcel Energy’s local electricity service, to create a new city-owned utility.
In May of 2018 voters in Athens, Ohio approved a “carbon fee” of about $1.70 per month on their electric bills to pay for clean energy programs, like putting solar panels on local schools.
But the Portland measure is the biggest by far, raising an estimated $30 million per year for the city of 650,000.
Opponents of the measure, organized as the Keep Portland Affordable Political Action Committee, argued that it will cost more like $79 million, which would be passed on to consumers. While opponents didn’t deny the importance of action on climate change, they pointed to a state program that already funds clean energy programs, and emphasized the rising cost of living in Portland, a booming community with rapidly rising housing prices.
“This measure is a regressive tax that will impact the people of Portland who can’t afford it,” said Portland Business Alliance President and CEO Andrew Hoan. “A program to provide access to energy efficiency resources already exists. Let’s reform the program we have and work together to keep Portland affordable for everyone.”
Damon Motz-Storey, spokesperson for the campaign, pointed out that large corporations would be “a consistent revenue source that will produce the funds year after year.” Given the big corporate tax cut approved by Congress earlier this year, plus low corporate tax rates in Oregon, he thinks “they can afford to pay their share.”
While the final list of affected companies won’t be known until the City of Portland releases their analysis next year, Motz-Storey thinks it will include about 120 firms, including Comcast, Walmart, and US Bank.
Even as the Portland fund won by a wide margin, a carbon tax in neighboring Washington state failed – for the second time. Measure 1631 did well in liberal urban areas like Seattle, but fared poorly everywhere else, especially in more conservative rural areas.
It is already prompting some in Seattle to think about a local, rather than statewide approach next time. “The carbon fee initiative had very strong support in certain pockets of the state,” points out attorney Greg Wong, who helped draft Washington’s carbon fee initiative. “So maybe it’s something that those local entities should consider.”
The Portland vote benefited from the precedent set by the Portland Children’s Levy, approved by voters in 2002. The Levy collects $21 million per year through property tax to pay for programs that support “positive early development, school engagement and academic achievement, high school graduation, and family safety and stability.”
It was also helped by putting low-income people and communities of color first. “Community-facing organizations” made up the core of the steering committee for the campaign, including the Asian Pacific American Network, Coalition of Communities of Color, NAACP, Native American Youth & Family Center, OPAL/Environmental Justice Oregon, and Verde.
A significant focus of the programs will be to benefit disadvantaged communities, while also cutting carbon emissions. About half of funds are set aside for renewable energy and energy efficiency programs, and another quarter for job training.
“Regenerative agriculture and green infrastructure,” such as tree planting and community gardening, will get about 15 percent of funds. Motz-Storey argues this will help make Portlanders more resilient to hot weather and other climate impacts. “It helps prepare those that are most susceptible to the weather changes coming from climate change,” he says.
Tax collection for the Portland Clean Energy Fund starts in January and new programs will roll out in 2020.
Youth unemployment, especially in southern European countries, remains unbearably high. Renewable energy and climate protection are an opportunity to create new, well-paid jobs in urban and rural areas. Dr Hartwig Berger explains.
Spain and Greece were hit hard by this summer’s droughts and wildfires – the Mediterranean regions are highly endangered by the climate crisis, and energy change there is urgent. At the same time, the opportunities for a climate-friendly transformation of the energy systems are very promising. The conditions there are excellent for the use of sun and often ideal for the exploitation of wind. There is a considerable scope for efficient and economical energy use too.
It therefore essential to train young people in qualifications and skills that are required for this vast economic transformation so that Europe can become a global leader in green energy and fulfil its Paris commitments. They can be offered a promising professional future instead of being marginalized from work.
At the beginning of 2018, a team from three countries conducted research in the Spanish province of Cádiz and in Athens. Their goal was to find out what opportunities there were for a climate-friendly energy change in the coming years and the additional demand for qualified work resulting from it. Next, they examined how the energy transition is viewed by stakeholders, local politicians and affected young people themselves and whether local communities are willing to participate in appropriate initiatives. Finally, the team developed a set of proposals on how such professional training should be designed in order to increase the prospects of subsequent employment.
The project was financed by the EU Climate Initiative (EUKI) of the German Federal Ministry for Environment.
Potential for renewables
The key results of the research are that the energy transition could result in hundreds of thousands of jobs, especially for young people. In addition, the Mediterranean’s sunny climate makes distributed solar energy a profitable option.
Transitioning to renewable energy and climate protection offer considerable employment potential. We expect a six-figure number of new jobs in Spain and almost a six-figure number in Greece for energy-efficient building refurbishment alone. In the various renewable energy tasks, we estimate the number of new jobs in both countries to be in the five-digit range. In the municipalities surveyed, the energy balance of the buildings is generally so unfavourable that the applicable national and European regulations virtually force refurbishments.
From an economic point of view, the prosuming (production and consumption) of solar electricity required by households, businesses and public institutions themselves in the investigated regions is also very attractive. In Greece, the legal framework is favourable. In Spain, fundamental improvements can be expected in the near future. Even for low-income households and businesses, solar power generation is economically viable, provided that there are favourable microcredits, state subsidies and offers for a so-called “energy contracting” *.
At present, young people in the regions who are trained in energy management have clear difficulties to find jobs in their field. Their chances improve significantly if vocational training is closely linked to practical learning in companies or communal activities. But close attention must be payed to prevent misuse of apprenticeships by companies.
Policy proposals: local and regional training
The team came up with the following proposals to improve youth unemployment and switch to clean energy:
– Municipal action plans at both local and regional level. Action days should be organized in towns to present possible or existing projects and to inform citizens and local businesses about national and regional energy plans, as well as the possibilities for funding activities related to energy and climate protection. For renovations and energy efficiency projects, the study recommends building cooperatives or neighbourhood associations.
– Programs for targeted “dual” qualification of young unemployed people and energy refurbishments in municipal buildings. The energy-saving provisions for buildings should include natural techniques and the use of renewable energy sources on site. In autumn 2018, a test project was launched in small towns near Cádiz and in Athens for schools in these regions, which are notoriously hot in summer and cold in winter.
– Programs for “round-up” training of young people. It is crucial that these programs begin now because in the coming years, a large number of experts will be in demand for the use of solar energy. Training should include planning, installation, monitoring, economic efficiency calculations for solar systems, plus energy-saving measures.
– Professional training programs in climate protection activities for youth in rural areas. Young people without jobs and training have the greatest difficulties in finding a job in the regions studied. Therefore, providing professional training in the sectors of agriculture, forests and green urban environment will be important.
– The existing “European Youth Guarantee” should be extended to finance training in occupations in which a high demand for skilled workers can be expected in the future. This is undoubtedly the case in the areas of energy transition and climate protection.
The detailed study “How to Reduce Youth Unemployment by Fighting Climate Change” is available at www.hartwig-berger.de.
Dr. Hartwig Berger (Berlin), was before his retirement a private lecturer for sociology at the FU Berlin and at times deputy in Berlin and chairman of the Ökowerk Berlin.
- *”energy contracting” is a bold technical term. It refers to contracts in which a company typically invests at its own expense in energy-saving measures or energy installations and then “recovers” its own costs by means of the savings achieved, etc.
Since multiple failures of the Puerto Rican electricity network due to climate catastrophes, the government is looking for new ways to create more energy security. Energy reforms are intended to remedy the situation, but what role do renewable energies play? Maximiliano Proaño explains:
In September 2017, Hurricanes Maria and Irma destroyed an important part of Puerto Rico’s electric grid, leaving many people without power for months. Indeed electricity generation dropped by 60% in the fourth quarter of 2017 from the same period in 2016.
This tragedy raised a national debate about the security and resilience of Puerto Rico’s energy grid. The crisis presented the necessity of energy reform and opened the opportunity to modernize the energy system which relied heavily on fossil fuels. In June 2017, 47% of its electricity came from petroleum, 34% from natural gas, 17% from coal, and 2% from renewable energy. The share of renewable energy in the country is meager considering Puerto Rico’s potential for wind, solar photovoltaic and ocean waves resources. In fact, using only 10% of these resources could provide an estimated 115% of electric energy demand. In order to change to renewable energy, recent report identified four critical areas for policymakers:
- The promotion of an energy vision for Puerto Rico’s self-sufficiency and credibility
- An independent regulator with enforcement powers
- A modern regulatory framework and integrated resource plan (IRP)
- The involvement of cooperatives and municipalities in the transition
Puerto Rico’s parliament has recently passed an energy reform law in hopes of increasing electrical security and resilience. Governor Ricardo Roselló signed the Transformation of the Electrical System Law, and on November 6th it was approved by the Senate. The law includes measures to make the electrical system more resistant to atmospheric events through the use of small-scale power plants, a revision of the routes of the distribution system and burying lines in urban centers. The energy policy also includes a goal of 100% renewable energy by 2050. Another important aspect of the project is the elimination of incineration as alternative renewable energy.
The energy policy also privatizes the Puerto Rico Electric Power Authority (PREPA). The government sees this as justified because the current public monopoly in the energy sector practically abandoned maintenanceof the electrical grid infrastructure. The new law establishes that no supplier can own more than 50% of the generation assets. It also allows for people to become “prosumers” – both producers and sellers of their own small-scale energy like solar panels. In addition, the law aims to facilitate the interconnection of distributed generation and microgrids.
Solar energy companies have expressed concern because the law allows charges in the net metering system. Net metering means that if a person produces their own power, they can use it whenever they want instead of just when it is produced.The bill affirms that the Electric Power Authority, its successor, or operator of the transmission and distribution network may propose as part of its tariff charges to clients for net metering. It will be the Energy Commission that will evaluate said charges as part of the tariff proposal.
But this bill would do little to stop the development of natural gas, according to the Institute of Energy Economics and Financial Analysis (IEEFA). In the short term, it has been proposed that combined power plants make up for the elimination of coal and oil plants (which are currently two-thirds of current electricity generation). Critics have pointed out that Puerto Rico does not produce natural gas, nor does it have its reserves. Nearly all natural gas is imported from Trinidad and Tobago as liquefied natural gas (LNG). If the goal is to achieve 100% renewable energy generation by 2050, focusing on natural gas will not be enough.
Another benefit of the current focus on switching to renewables is that it creates a more resilient power network. Abandoning mega-projects and instead focusing on small, distributed generation will make power outages more rare.
As for renewable energies, while the new law sets impressive goals, it does not propose clear incentives to achieve it while it proposes a plan to rebuild the electricity system through gas plants.
A vital area of the reform must be the involvement of cooperatives and municipalities in the transition. In my opinion, this is an essential absence of the new Puerto Rico’s energy framework. The process of privatizing the energy sector can be very harmful if it means the concentration of the property in a few hands. On the other hand, a process of controlled “privatization” can also mean a positive experience of local development, increasing energy cooperatives, self-generation or private partnerships with municipalities for local projects, which distributes the benefits among many.